Friday, July 23, 2010

Death of the Wine Critic

A column that appears in the July 2010 edition of Meininger's wine Business International

“The incessant whining of… critics as they find themselves jobless and journalistically homeless... sacrificial offerings to the bottom line. There has been a drastic kill-off… during the Great Recession, which has proven to be not a typical cyclical downturn, but a profound reordering of the media universe – the cannibalizing of traditional print by digital”.

Reports of the apparently terminal decline in the prospects of wine criticism will come as no surprise to anyone with an interest in the way our industry communicates with its customers. But the quote with which I opened this column actually had nothing to do with wine. Written by James Wolcott in the July 2010 edition of Vanity Fair, it is concerned with a species I’d have imagined to be far less endangered: the film critic. According to Salt Lake Tribune blogger Sean P. Means, no fewer than 65 critics have lost jobs from publications such as Newsweek, USA Today and The New Republic.

The wine world is very good at examining its own navel and ignoring changes in the landscape beyond its cellar and tasting room doors. But the shrinkage in the role of the traditional critic, almost across the board, is a phenomenon that needs to be taken very, very seriously. For the simple reason that the wine world has an almost ludicrous reliance on people who have historically helped to fill the pages of newspapers and magazines. Setting aside the totemic influence of Robert Parker and the Wine Spectator, a few hundred pen-wielders across the globe constitute many wineries’ only real means of communication. Wineries justify spending tens of thousands of dollars at exhibitions on the basis of the journalists they’ve met. Entire forests are felled to produce glossy brochures and press-packs that, even in journalistically happier times, mostly went straight into the recycling bag.

The movie industry in its US homeland is painfully aware of the power of the pen. Traditionally, the reviews that appear in the Friday print media before a weekend opening can make or break a movie. Which is why producers sometimes decide not to hold screenings for critics, or to open their films midweek, relying on word-of-mouth to build ticket sales. The trouble is that today, word-of-mouth is increasingly driven by “word-of-Social-Media”. Last year, when Bruno, the successor to the highly successful Borat opened, it did so to big audiences, but was hugely criticised on Twitter by people who used their mobile phones to express their disapproval within minutes of leaving the cinema – or even while watching the film. Ticket sales plummeted by 40% on the second day.

But the shift in the balance of power from critics to consumers that social media like Twitter has created is only part of the story. There’s also the crucial question of the all-too visible gulf that separates the two groups. Some of the films and wines that are most hated by critics are among the most successful in delighting audiences. And vice versa. The critics respond to this kind of
criticism by saying that it isn’t their job to reflect consumer taste, but to use their knowledge and experienced to form that taste. It is a totally reasonable view, and one that would probably be echoed by serious writers on art and music. But, what if the publishers’ accountants have discovered that the number of readers who want their tastes to be formed simply fail to add up to a commercially viable group? What if the column has become an irrelevance? In a recent Financial Times interview, Michael Pollan, author of The Omnivore’s Dilemma, explains his reason for giving up a job as a television critic. “I realised people who read didn’t watch TV and people who watched TV didn’t read.”

The film industry has a huge advantage over the world of wine. It doesn’t actually need critics to promote its wares. Profiles of the stars – and possibly even the director – can, like those of musicians, be written by journalists with no specialist knowledge. And most importantly, these profiles can appear in a wide variety of places.

Professional wine writers naturally hate being pushed off the perch by unqualified colleagues, but to be brutally frank, the discomfiture of these writers is not the concern of wine producers and distributors. Their challenge lies in finding ways to make their product, the place they make it, and even themselves and their employees sufficiently interesting to warrent writing about for an audience with no intrinsic interest in wine.

Tuesday, May 04, 2010

Thinking about the land of Oz

Twenty years ago, I annoyed one of the biggest wine producers in California by suggesting that Australia’s winemakers had become the vinous equivalent of the Japanese motor industry. Good at listening to the market and giving it what it wanted.

Today, if some of the loudest voices in the Australian wine firmament are to be believed, the only Japanese comparison to be made is with Toyota, the company that has had to recall nearly 10m of its vehicles and stands accused of causing well over 30 deaths. Before anyone accuses me of hyperbole here, listen to the speech made earlier this year by Brian Croser, founder of Petaluma to the American Association of Wine Economists. In it he talked of the “highly visible current tragedies” of the “fewer than 10 very large, multi-region operators” who were apparently solely responsible “for Australia’s global wine demise and grape and wine surplus…”

Of course, there’s no denying that the Australian wine industry is in trouble, especially when compared to the glory days of just a few years ago when its ascendency seemed to be unstoppable. But it hasn't actually injured or killed anyone and no major company has gone bust, so to my mind, terms like “tragedies” and “demise” do seem to be a little over the top.

Let’s consider the facts. During the 1980s and 1990s, Australia built an export-driven industry from an almost standing start. Like many another successful business, it invested in increased production facilities. Then, as has happened all too frequently in other industries, rivals raised their game, market conditions toughened and the Australian winemakers lost their competitive edge. This was exacerbated by water shortages which raised production costs and then by a global economic crisis. There’s nothing very extraordinary about this story. Last year, Starbucks had to close hundreds of the outlets it had opened over the previous five years; an expanded Christian Lacroix sought protection from bankruptcy and then, of course, there were the US car giants... Examples like this fill the news pages every day.

According the Australia’s doom-mongers, Britain is where everything has gone most wrong – where discounting by the big companies has killed the goose that was laying such tasty golden eggs. So how badly are Australia’s winemakers doing there? Well, according to Stewart Blunt of Nielsen, over the last year, Australia has lost market share, dropping from 21.2% of the market to 20.4%. It’s still the biggest player, but California, South Africa and Italy are all snapping at its heels. And, just as importantly, when you take into account a weakening UK currency and a hike in duty rates, the average price of Australian wine has fallen in real terms. Today, a bottle would set you back £4.51; 12 months ago, it would have been just £0.04 cheaper. France, by comparison has seen the price of its wine climb from £4.64 to £4.97 – which is more or less accounted for by the duty and exchange rates which have had to be absorbed by the Australians.

France’s higher prices came at a significant cost, however: a fall to fifth position on the list of UK imports and a drop in market share from 14.1% to 12.3%. South Africa, one of the countries that has stolen customers from Australia is doing brilliantly – largely on the back of one discounted brand – First Cape – and at an average price of just £3.87. Italy is scoring a lot of runs – with own-label Pinot Grigio, and an average price of £4.10. The US, another winner – thanks to sweet rosé gets a few more pence per bottle – at £4.30, but is still under the market average of £4.35.
Australia remains the biggest player in the UK market, and still commands a higher price per bottle than any of its three biggest competitors. Contrast this with the loss of market share of France, the country, many Australian winemakers would seemingly most like to emulate, with its focus on cool climate regions, small producers and regionality.

Australia has to get its house in order, but its problems are far smaller than those of, say, Spain which last year yet again faced the question of how to dispose of nearly a third of its crop.
Which brings me back to Japanese cars. In March, Toyota sales in the US were 40% higher than in 2008 against a market that generally rose by 23%. My unfashionable guess is that, like the motor manufacturer, Australia may be able to call on a lot more consumer trust and affection than it currently likes to imagine.

Monday, March 08, 2010

Adapt or die

Adapt or die… A harsh choice, I admit, but the reality is there for anyone with eyes that are open to see it. Times will be hard for anyone who imagines that they can get through this decade using a 20th century roadmap. Many other industries have understood this clearly; the world of wine still has to remove its head from the sand.

We all love reading traditionally printed books and newspapers, and many still enjoy listening to a whole album of music by the same musician – and handwriting Christmas cards. But these activities are beginning to look as “quaint” as smoking a pipeful of tobacco and wheeling a baby around in a pram. Last year, the US publisher Random House sold 100,000 copies of Dan Brown’s The Lost Symbol as electronic "e-books" in the seven days after its release - an impressive 5% of the total sale, considering that "e-readers" like Amazon’s Kindle were only launched in 2007, cost over $250 and have no other use.

This year, sees the arrival of Apple's and other electronic “tablets” that can be used as computers and allow users to watch movies as well as read books and newspapers. These new products and their successors will change the way we read words as much as the arrival of the mobile phone changed the way we communicate. Random House is not alone in exploiting the new technology: the giant magazine publisher, Conde Nast is busily redesigning its magazines to make them work in digital form. Meanwhile, Hallmark, the huge US greeting card manufacturer has introduced emailable greetings cards, and major record companies are scrambling to find ways of serving an audience that now prefers to buy its music online, one track at a time.

The European wine industry has historically treated change like the bubonic plague: just consider the ructions over switching from corks to screwcaps and the printing of grape variety names on French wine labels. More often than not, evolution has been imposed by circumstances and competition rather than generated from within.

Setting aside the issue of the changes that might be made to the liquid product (Justin Howard Sneyd of the dynamic UK retail chain Waitrose raised many eyebrows and hackles at the Wine Future conference when he talked about drinks that combine wine with other ingredients), the industry can and must consider other forms of evolution. Among these, packaging is the most obvious. The coffee industry has been transformed by the the Nespresso single-serve “pod” which seeks to bring instant coffee simplicity to the process of preparing an espresso or cappuccino. Makers of dark beers were similarly boosted by the “widget” that facilitates the creation of a creamy head of fine bubbles when poured from a can. The wine industry has much to learn.

Changes in distribution are, however, arguably even more important. 350 years ago, a clever Frenchman called François-Auguste de Pontac opened an inn called the Pontac’s Head in London from which he sold his family’s Bordeaux. At a stroke, he created the first branded wine (Ho Bryan is the earliest to be referred to by name rather than region) and created a novel form of distribution for it. Today, wine producers across the globe are complaining at the power of the retailers. They should learn from de Pontac – and from Nestle who sell $2bn of Nespresso pods exclusively online, by phone – or through over 120 Nespresso Boutique shops and bars across the globe.

Torres and Antinori – two unusual innovators in the European wine world – have both opened on-trade outlets, but neither is big enough to match Nespresso. But how long will it be before Constellation or a set of like-minded firms collectively addresses the on-trade distribution of its wines?

Within the off trade, this taking-back of power is already beginning to happen… In the UK, where the supermarket stranglehold is at its strongest, Matthew Clarke, which is partly owned by Constellation, has recently begun to offer its on-trade wines directly to retail customers through an online service called The Symington Group (Dows, Grahams port etc) is similarly launching a direct-to-the-public operation alongside JE Fells, its UK wholesaler.

Seth Godin, the American thinker, recently described how the Marx Brothers began as Vaudeville stars in 1910, and shifted to silent, then sound movies and radio before finally appearing on television. They adapted themselves (and their act) to new forms of distribution as they arrived. The choice confronting many wine producers today lies in embracing change and going into the history books as enduring stars like Groucho Marx, or becoming historical footnotes like all those performers who decided that moving pictures were not for them….